Community Investment Tax Credits Can Help You Save on Taxes
Community Investment Tax Credits
Thank you for your interest in supporting RTMC! Are you a resident of Maryland or a business that pays Maryland state taxes? If so, RTMC can help you boost your contribution by reducing your tax liability, using Maryland’s Community Investment Tax Credits. Most years, RTMC receives an annual allocation of Community Investment Tax Credits from the Maryland Department of Housing and Community Development. After the allocation, RTMC finds individuals and businesses who wish to donate $500 – $500,000 in money or real property to RTMC, and in the process, earn 50% of the value of the contribution in state tax credits. Community Investment Tax Credits are usable in addition to the Federal and State tax deductions for charitable donations.
The combination of the tax credits and tax deductions significantly reduces the actual out of pocket spent per dollar donated…which allows for larger donations! The following table shows how RTMC and businesses at different tax rates can benefit from the Community Investment Tax Credits:
|Small Company||Mid-Size Company||Large Company|
|Tax Rate||17% (10% Fed, 7% State)||30% (23% Fed, 7% State)||43% (36% Fed, 7% State)|
|Donation to RTMC||$1,000||$1,000||$1,000|
|Combined tax deduction||($170)||($300)||($430)|
|Tax credit on state tax return
(50% of donation)
|Total tax benefit||($670)||($800)||($930)|
|Net out-of-pocket cost||$330||$200||$70|
Eligible businesses include any entity that conducts a trade or business in Maryland and is subject to the state income tax, the public service company franchise tax, or the insurance premiums tax. These types of entities generally include corporations, public utility companies, insurance companies, financial institutions, S corporations, sole proprietors, and limited liability corporations.
Eligible individuals include residents of Maryland. Residents are defined as individuals who are living in Maryland on the last day of the taxable year, or individuals that live in Maryland for more than 6 months of the taxable year and are physically present in the state for 183 or more days during the taxable year.
For more information about making a donation and using Community Investment Tax Credits, please contact Elisa Hermes at 301-947-9400.
The following information may be useful to both individuals and businesses making contributions, as well as nonprofit participants in the Community Investment Tax Credit program. This information is for reference only and any individual or business contemplating making a contribution, that has questions about their specific tax advantages, is encouraged to consult with their accountant or tax professional.